Game Changer Insights Detail

5 big questions on innovation

Sebastian Herzog constantly moves between corporate culture and startup spirit. Herzog has more than 10 years of work experience within Lufthansa, including being the former executive assistant to the CEO of Lufthansa Group, while also founding his own fashion ecommerce startup OfficePunk.

In 2014, Herzog finally bridged both worlds by becoming a true corporate entrepreneur, initiating and founding the Lufthansa... Full profile »

1

How is your team changing the game within your industry sector?

Three main differentiating factors between the Lufthansa Innovation Hub and other corporate innovation activities are:

1. Talent: Instead of “just relocating” existing line-managers to a fancy tech-location – we managed the challenge to get significant amount of entrepreneurial talent on board. Currently 80% of the Lufthansa Innovation Hub consists of people that have not worked for Lufthansa before.

2. Tool set: Instead of being a pure incubator, accelerator, technology lab, or corporate VC, we are deeply linked with the Lufthansa Corporate Strategy and pursue whatever innovation setup that is suited to a specific challenge.

3. Test-driven culture: Instead of writing five-year plans on whiteboards, we try to get instant market feedback, regardless if we are building prototypes and products or developing broader strategies.

This unique combination really allows us to support and drive the digital transformation within Lufthansa by supporting the existing business with startup partnerships and new products, (“better business”) as well as pursuing topics out of current business boundaries (“new business”).

2

What are some of the biggest impediments to innovation in your organization or industry sector?

There are three levels one has to consider:

First – The Innovation Team. In general, you often see innovation teams pursuing something they are passionate about but that customers do not really care about, or teams unwilling to kill off ideas that aren’t working. Within the Lufthansa Innovation Hub we try to rapidly kill our projects if they do not meet our initial hypotheses.

Second – The Industry. You always have to consider the industry you are working in. The aviation industry for example highly relies on safety—we build systems to be backed up by systems to be backed up by systems. You don’t want us to do fail-fast. Fail early, when it comes to building or running aircraft or engines. Even within development, safety is drilled down with the manufacturers and airlines at a level only otherwise seen in nuclear energy. This is understandable, but it has implications for innovation potential.

Third – The Corporate. Corporates in general have a lot of things to lose – for them it is so hard to innovate. Start-ups can fail fast, because you have no customers to lose, no brand to lose, no package to lose. At big corporates, you have everything to lose, and that keeps you from pushing the boundaries. That is where corporates have to find their own platforms where they can be explorative, and that is where we come in.

3

How has innovation become engrained in your organization's culture, and how is it being optimized?

The history of the Lufthansa Innovation Hub is quite a unique one. In May 2014, a small group of internal Lufthansa colleagues convinced the Lufthansa Board about the relevance of travel tech startups as driver of innovation in our industry. That time, we were looking for the commitment to acknowledge those startups as a very relevant stakeholder for Lufthansa. Based on these very early and initial findings, I personally had the chance to set up a team of three internal and three external colleagues to move to Berlin for three months and try to figure out what is needed and what is suitable for Lufthansa.

The six of us spent the time in a shared apartment in Berlin: meeting various startups, corporate entrepreneurs, building the first prototypes, and finally convincing Lufthansa to move this initiative to its next level with founding the Lufthansa Innovation Hub as a separate legal entity in January 2015. While we were equipped with an initial budget for one year, Lufthansa just recently increased their commitment with a three and a half-year funding and more resources focusing on commercial and strategic impact. To summarize, these intense 30 months since the days within the joint apartment one can say that the Lufthansa Innovation Hub moved from an internal experiment towards a fully integrated part of the digital transformation of Lufthansa.

4

What technologies, business models, and trends will drive the biggest changes in your industry over the next two years?

Speaking of technologies, we live in a world with some very interesting technologies all with the ability to change major parts of our daily lives. For example, there is voice recognition, artificial intelligence, virtual and augmented reality, blockchain. One could name every fancy buzzword here, but the question I am really asking is, what´s the impact on business models and customer interaction?

Take travel booking as an example. As the consumer, you are confronted with numerous choices from airline websites, meta-searches and online travel agencies. Whether you are on a leisure or business trip, you could spend endless hours comparing offers and trying to find the best deal. Even if you found what you are looking for, it is not convenient to book. You are forced to type in passport credentials and personal data over and over again. This high degree of inconvenience is a perfect open door when it comes to disruption.

We see a change in the interface: travelers are very eager to use their existing communication channels such Email, Whatsapp, or Facebook, and rather deal with one travel-focused concierge service than with a broad set of various travel providers, each with his own communication. That observation and anticipation of customer behavior then led to the launch of www.hellomissioncontrol.com – a travel concierge built by the Lufthansa Innovation Hub.

Talking about the future, will we still have airline booking websites around in five years? I don’t know. I literally cannot imagine people who still enter an airline website domain and manually type in where they want to go. I just don’t see it because there are so many trends towards much more convenient frontends with massive data-driven backend that actually can perform the task you want them to do.

5

Can you share a specific innovation strategy you’ve recently encountered which you find compelling?

I am impressed by innovation strategies that are able to adapt according to what is happening out there. Just as if you would be building a prototype: you build, you learn, you measure, you build again. Considering the uncertainty and speed we are living in, I am convinced that five year plans are not worth the paper they are written on. Strategy has to be as agile as product development.